If you got a form 1099 (1099-B, 1099-Div, 1099-INT) from a custodial account, you must report it on your child's tax return*. The fact that you got the 1099 means there was reportable income. The fact that you did not remove the money form the account does not make it non-taxable.
You do not report his/her income on your return. If it has to be reported
at all, it goes on his own return*. If your dependent child is under age 19 (or
under 24 if a full time student), he or she must file a tax return for 2016 if
he had any of the following:
1. Total income (wages,
salaries, taxable scholarship etc.) of more than $6,300 (2016).
2. Unearned income (interest,
dividends, capital gains) of more than $1050 (2016).
3. Unearned income over $350
and gross income of more than $1050
4. Household employee income
(e.g. baby sitting, lawn mowing) over $2000 ($6300 if under age 18)
5. Other self employment
income over $400, including box
7 of a 1099-MISC
*If his only income is from interest and dividends, Alaska PFD or capital
gains distributions shown on a 1099-DIV, there is a provision for entering
it on your return, using form 8814.
